After those steps are covered, the time comes to get into the nitty-gritty of the specific types of stocks that Cramer scoops up during a downturn. The good news is that the more brutal the sell-off, the more attractive these stocks will look.
His first approach is to look for stocks that have pulled back from their highs during the sell-off. The new-high list is always a great place to start looking. Stocks on that list also tend to be expensive, which is why a big decline may present an opportunity.
Specifically, Cramer looks for stocks that were knocked off the new-high list and are trading a couple of percentage points down from their 52-week high. Those will be the money magnets of the market.
However, the "Mad Money" host warned that not all of them will be worth buying. Some may come off the list because they are damaged goods, so doing your homework is still important.
The second kind of stock that Cramer looks for during a major sell-off is the type with dividends that become more attractive as their share prices go lower. Just like the 52-week high list is useful for spotting potential buys, a shopping list of stocks to buy if only their dividends were a little higher can also come in handy during a downturn.
But what does a market correction have to do with a dividend or yield?
When a market correction occurs, the price of the stock goes down and the yield goes up. Cramer loves it when a sell-off is so severe that an "accidental high-yielder" is created.
That refers to stocks that did not intend on being dividend plays, but fell so hard that the dividend yield suddenly became meaningful or a way for the stock to have a quick bounce back.
"I know dividend investing isn't sexy, but believe me when I tell you that nobody ever woke up unhappy the next morning after bringing home a stock with a big dividend," Cramer said.
So, for more conservative investors, Cramer recommends picking up stocks that will practically guarantee money accumulation. That is exactly what a dividend does.
In short, Cramer considers a sell-off as an opportunity to buy some of the best stocks out there, especially those that have just pulled off their highs, or those that garner fat yields thanks to the decline.
Questions for Cramer?
Call Cramer: 1-800-743-CNBC
Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram - Vine
Questions, comments, suggestions for the "Mad Money" website? firstname.lastname@example.org